UK shale and Brexit.

embarrassed1My feelings about Brexit are obvious, but putting them aside,  consider what it may mean for UK energy in general and onshore natural gas in particular.

  1. The essential rationale for UK onshore gas remains. The North Sea is declining fast and the only alternatives will be imports.  Both Norwegian and LNG have links to oil prices and will get more expensive.
  2. The carbon case for UK onshore gas is as strong as ever.  If it’s an error to export lost tax revenue, it’s insanity to import high carbon gas instead of intrinsically lower domestic production.Thus, on rational terms, UK onshore investment would seem rational.
  3. UK investments, in any field, couldn’t previously depend on productivity, a highly skilled workforce or good infrastructure. They depended on a lack of risk. Enough said.

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You can be sure about shale – and Shell

sea-shell-300x200Reuters report about Shell and shale is among the most important shale stories of not only this year, but of the entire shale era.  Shell’s late embrace of shale actually makes a lot of sense. They are getting into shale at exactly the right time. ExxonMobil’s foray into XTO was stunning at the time, but in retrospect was too soon.  BP, Total and Chevron have made various, if often  tenuous, efforts. Statoil made the wisest and earliest investment in the Marcellus back in 2009 of any major, although ENI’s smaller US investment of the same year was also smart in timing and money.  BHP Billiton seemed to have bought at the height of the market in 2011, but even that will ultimately be in the money, even at these prices.

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The Mistrust of Science and what it means for natural gas.

sci placeboI’m in general good health. I never get so much as a sniffle, haven’t had a headache in years, and as long as I stay away from mirrors I feel 30 years old. Thanks to either good genes or the beneficial aspects accruing from twenty years of smoking, drinking and staying up all night, I often appear ten years or so younger than I actually am.

Don’t let that fool you. I’ve also had a fractured skull leading to two brain operations, a burst stomach artery, two separate forms of cancer and a heart valve replacement. Never once during my involuntary medical adventures did I ask to be prescribed the treatment 3% of doctors recommend. In short, I trust science.

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The Three Great Advantages of UK Shale Gas

worldmpThere are some key questions about shale gas internationally, and for now, the international front often means the UK.  Every country in Europe is awaiting the UK’s decision (on fracking anyway). But geology is the study of planetary resources.  The common idea that somehow the United States is uniquely blessed with the ability to drill for oil is an example of a strange concordance between anti-fracking activists and right wing US Republicans. I have always agreed with Roberto F. Aguilera’s point here:

As indicated in our recent book, The Price of Oil, successful developers around the world could reap benefits similar to those experienced by the US in its progress with unconventional gas. The advantages afforded by the shale revolution in the US have been so strong that its international spread is inevitable. Most of the technology employed is not proprietary and so can be transferred across borders.


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Storm Brewing in North Sea, as harbours onshore lie empty.

hurricaneThe 2016 version of the summer must-read for energy geeks, BP’s Statistical Review of World Energy was issued last week, and as usual it’s the best reading until the International Energy Agency World Energy Outlook is published in November for the geek Christmas gift market.

It contains much good, even great, world news, including the best of all: global energy intensity continues to fall, consigning the idea that energy use and GDP growth are inextricably linked to the dustbin of Peak Oil History. Even better news is how coal is also reaching a peak. Europe was one of the few areas that showed above average growth in energy use, admittedly from levels caused by economics and renewables.

Nonetheless, closer to home, there looks to be trouble ahead for both UK oil and gas production. There was a marginal recovery in North Sea gas production, but this chart shows the gap between consumption and production in the UK, as it developed in the 21st century:

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Natural gas turns the world upside down: A depressingly familiar tale.

lock the gateLike the UK, Clyde Russell comes from a small island off a large continent, in his case Tasmania.  But he’s been writing some great stuff from his vantage point looking at the other great disruption of the 21st century in world natural gas, the emergence of Australia as a second Qatar in its potential for LNG exports

For those who haven’t been looking at it, i.e. just about everyone outside of the global LNG industry, this comes as a surprise. Australia’s LNG capacity has taken even longer than the US shale industry to reach serious production and at a far higher cost.

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What are the facts on shale damage to workers and environment?

lawdoctorsOne thing many US observers find annoying about the shale debate is how an “urban myth” has developed where the US is particularly careless and the UK wouldn’t suffer the consequences of “cowboy” and “controversial” operators.

Certainly UK regulations are tough and I have no problem with them either.But there is a variant of Stockholm Syndrome going on, where not only UK regulators, but even more bizarrely, some UK would be operators, cite the US experience just as negatively, and sometimes even as often, as some fracktivist groups.

As a result, feelings and opinions trump, if you’ll excuse the word, facts. Everyone is entitled to an opinion, but the US provides an avalanche of facts. So the evidence of damage caused in the US should be easy to uncover.  Since I’m an industry person, I can attest how my facts sometimes get the spots knocked off them to support the eternally “controversial” meme of alleged US damage to the environment.

But let’s approach this from two angles: worker injuries and the not entirely unconnected example of lawsuits.

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Shale “methane leaks”: A UK distraction that needs to be closed down

Friendlys files for bankruptcy protection RREQ5Q9 x largeWhat if we left UK gas in the ground? Then what? Friends of the Earth say, often, and at some length, that pursuing new sources of gas – a fossil fuel – is not compatible with efforts to tackle climate change.  A chief objection is the methane controversy.  Methane is unburned natural gas which may, or may not, negate the climate benefits of lower C02 from the burning of natural gas instead of coal.

The science is far from settled on the methane from wells issue, especially in a UK context – we don’t have any. The US methane argument has used leakage rates of anywhere from 1.3 to over 10 % not only from wells, but from the distribution system, whereas in the UK, we have proof that the distrubtion component is far lower. If the leaks are low, then onshore UK natural gas remains not only good for the UK, but good for the planet. In the absence of any produced shale gas, the only proof that could be relevant is  what leaks from the UK pipe system. If one knows what to look for that’s easy to find out via National Grid, the pipeline operator. But probably only if you’re a gas geek. Most people, apart from sad cases like myself, simply switch on the heating or hot water and don’t consider how many people worry about gas so they don’t have to give it a second thought.

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